I was talking to a friend about this recently. His parents purchased their home in Sydney for about $16,000 nearly 30 years ago. The place is now worth about $1mil. If they still had an IO loan, then they would still owe $16k. Just 6 months rent would be bale to clear this now.

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Assets owned by a discretionary trust are generally safe if the person goes bankrupt. You may think you will not go bankrupt, but this can happen for many innocent reasons – eg you own a business and your major creditor goes under owning you large sums of money that you can never recover. You business collapses as a result, and you have guarranteed a 5 year lease at $20,000 per month.

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You cannot claim losses from a trust from your personal income. Any losses would be quarrantined int he trust until it makes a profit.

You may be able to get around this with a Hybrid discretionary trust.

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Thanks Terry. Let me refresh your memory. Yep – that certain person was me. I was looking for a better rate, prudent I thought at the time to do due diligence against my current Lender…..however the results that came back were less money and higher rates from the 7 brokers that I canvassed, as compared with my Private Banker.

I suppose if you are Mr Smith off the street walking into a bank branch looking for a loan, perhaps a mortgage broker is the way to go. Compared to the better deals that are available and not advertised or distributed to the broking community….then maybe not.

Anyway, thanks for the input, from both you and Steve. We are reasonably happy with our financing and haven’t hit a wall yet. X-colled to the wazoo and loving it !!!!
[/quote]

Good to see you can keep going, but it would have been hard if you had to move one property to another bank.

Also remember, I did come close to getting you a better rate, but you failed to give me all the info. I think I could have beat what you were getting if I had known this.

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Elkam

I think in most states you will find they have clamped down on this. Unless you have a prior written agreement (in Vic), then you would have to pay stamp duty again if you nominated a different person to the one on the contract.

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Auspro is right actually. There is no CGT within the first 12 months, just income tax.

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Dazzling, I remember a certain person came to me looking for a better rate. But they wouldn’t have been able to move without great cost and hassle due to their loans being crossed collateralised.

And what if the current lender refuses to lend you more money, but others will?

And what if the current lender will lend you more money, but you find that one property in the portfolio went down in value. This could prevent you getting the required finance.

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Good point Misty.

I never thought about properties going down in value, but it is certainly happening in this market.

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True, but you still have the ability to increase both loans. I guess for smaller amounts it would be a bit of a hassle increasing two loans. But when you get bigger it may be worth the hassle.

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I just came across another post related:
https://www.propertyinvesting.com/forum/topic/22939/2.html?sortfield=&sortorder=
See the one by purple kiss

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